Plaintiff Lyle Real was a Missouri resident who sought to purchase a vintage Corvette over the internet.  Mr. Real came upon an advertisement posted by defendant Richard Conklin, which described a Corvette defendant had posted for sale as a “one owner car,” with a “good frame,” the soft top was described as good, and the advertisement stated that the car contained the “original radio/cassette.”  In the section of the advertisement describing the condition of the car, the advertisement stated that the seats were “a little worn.”  Based on that advertisement, Mr. Real bid $13,651 for the 1970 Corvette.   After placing the bid, but before the close of the auction, Mr. Real phoned the defendant and was assured that the condition of the Corvette was as described in the advertisement and that the car could be driven from New Jersey to Missouri.

At the close of the auction, Mr. Real was the high-bidder and the winner of the Corvette.   Defendant then called Mr. Real and advised him that the car could not be driven from New Jersey to Missouri because the automatic headlights did not work, the windshield wipers did not work, and the car lacked a spare tire.  None of these defects was disclosed in the advertisement or in any telephone conversations.  Mr. Real elected to have the vehicle shipped to Missouri.  Upon receiving the vehicle, he discovered that the car’s frame was rusted in half and disqualified the vehicle from registration in Missouri, the convertible top was in poor condition, the seats were ripped in various places, the driver’s seat frame was broken, the radio/cassette was not original, the engine hesitated, and the carburetor was out of tune.  Plaintiff essentially paid $13,000 for a car that was worth about $5,000.  Mr. Real brought suit against the plaintiff in Superior Court in New Jersey and asserted claims under, among others, the New Jersey Consumer Fraud Act.

Defendant Conklin argued that he is not a “dealer,” as defined in the Consumer Fraud Act, and therefore he is not subject to the Consumer Fraud Act’s reach and remedies, which include triple damages and attorneys’ fees.  In analyzing this case, the Supreme Court first noted that the scope of the Consumer Fraud Act is wide and deep.  The Consumer Fraud Act applies to all advertisements, which are defined to  include any attempt to directly or indirectly to induce any person to enter or not enter into any obligation or acquire any title or interest in any merchandise.  The term “merchandise” includes any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale.  Finally, the Consumer Fraud Act defines a “person” as any natural person, or his legal representative, partnership, corporation, company, trust,  business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, trustee or trustent. 

The Supreme Court then noted that the Consumer Fraud Act has been applied in a wide variety of contexts, including: undisclosed document fee charges on a new car purchase, residential siding products, overcharges in summary dispossess complaints, overcharges on loan interest, arbitration of mortgage claims, rent-to-own contracts, car repairs, car warranty claims, carpet sales, and pre-paid phone cards.  The Court then noted that the Consumer Fraud Act applies to “any person,” and the definition of “person” is very broad.  The defendant in this case was not exempted from the reach of the Consumer Fraud Act because he was not a member of a learned profession or a highly regulated industry. 

Defendant also argued that the Consumer Fraud Act should only apply to traditional dealers, citing a case that held that individual home sellers are not subject to the Consumer Fraud Act, unlike professionals engaged by homesellers, who are subject to the Act.  Defendant argued that the only remedy against an individual seller should be under New Jersey’s Used Car Lemon Law.  However, the Court noted that by its very terms, the Used Car Lemon Law is intended to supplement, and not to preempt the Consumer Fraud Act.  Therefore, defendant Conklin was subject to the Consumer Fraud Act, and having engaged in an unconscionable sales and advertising practice, the plaintiff was awarded $8,651 in damages (representing the difference between the amount he paid for the car and its actual value), which was tripled to $25,953.  Plaintiff was also awarded attorneys’ fees and costs of suit.

The New Jersey Consumer Fraud Act provides very broad protection to New Jersey consumers and consumers from other states who are involved in transactions with New Jersey merchants.  If you are a victim of an unconscionable commercial practice by any merchant or seller, contact a New Jersey consumer fraud lawyer for an analysis of your case.

In the present case, the defendant had placed for sale a Comfort Inn located in Absecon, New Jersey.  The plaintiff was interested in purchasing the hotel and asked to look at the defendant’s business and tax records.  After examining these documents and finding them satisfactory, the plaintiff decided to purchase the hotel.  The tax documents produced by the plaintiff showed that the Inn made a significant profit in the three years prior to the year of purchase.

Eventually the plaintiff began to run the Inn; however, in the first year, plaintiff’s income from the hotel was projected to be much lower than what defendant had reported in its documents.  It was later determined that the discrepancy was the result of “phantom income” being reported by the defendant from a group booking of rooms by a company at a higher rate.  When asked to produce a contract with that company and other related documentation in anticipation of litigation, defendant denied any wrongdoing and turned the matter over to an attorney.  The defendant later claimed that financial documents related to this company were destroyed in a flood in his basement.  Plaintiff argued that if it had known the Inn’s true level of income without the “phantom income” included, it would not have purchased the Inn because the Inn would not have been profitable. 

Plaintiff sued defendant under the Consumer Fraud Act, as well as several common law theories.  After a bench trial, the trial court found in favor of plaintiff on the Consumer Fraud Act claim.  The trial court found that it was quite clear that the defendant had misrepresented the Inn’s income to the plaintiff, and therefore, the defendant had engaged in an unconscionable business practice that is prohibited by the Consumer Fraud Act.  The Consumer Fraud Act claim was appealled to the Supreme Court of New Jersey.  The Supreme Court agreed with the trial court’s factual findings, but ultimately concluded that the Consumer Fraud Act does not apply to the sale of an ongoing business.

In its analysis, the Court first looked at the text of N.J.S.A. 56:8-2, which provides that the Consumer Fraud Act applies to the use of an unconscionable commercial practice by “any person” “in connection with the sale or advertisement of any merchandise or real estate.”  The Consumer Fraud Act defines “merchandise” to include “any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale.”  The Court was also mindful that the Consumer Fraud Act is remedial legislation and should be construed to accomplish its dual purposes of protection of consumers and deterrence of unconscionable business practices.

Despite the fact that the statute specifically states that it applies to “real estate,” our courts have adopted a limited construction of the Consumer Fraud Act’s applicability to real estate transactions.  Essentially, New Jersey courts have limited the Consumer Fraud Act’s applicability in real estate transactions only to unconscionable business practices by professional sellers, and brokers, agents, and salespersons representing such professional sellers.  However, the Supreme Court also noted that there is nothing to preclude the Consumer Fraud Act from applying in favor of business entities that have been victimized by an unconscionable business practice.  While the Court recognized that applicability of the Consumer Fraud Act requires a case-by-case analysis, the Supreme Court held that there was no textual basis in the statute or other reason to expand the scope of the Consumer Fraud Act to transactions that, at their core, involve the sale of an ongoing business from one group of proprietors to another.

Nevertheless, the Consumer Fraud Act is still a broad piece of legislation that is applicable to many transactions and situations.  Anyone who has been victimized by an unconscionable business practice should contact a New Jersey consumer fraud lawyer for assistance.

The Legislature amended the Consumer Fraud Act in 2004 to expand its application to contractors who are engaged in the business of making or selling home improvements.  The Amendments made the Consumer Fraud Act applicable to all individuals and entities engaged in remodeling, altering, renovating, repairing, restoring, modernizing, moving, demolishing, or otherwise improving or modifying of the whole or any part of any residential or non-commercial property.

However, the Consumer Fraud Act specifically exempts from its provisions any contractors who are engaged in the building of new homes, and are therefore required to register under the New Home Warranty Act.  The Supreme Court reasoned that the purpose of this exclusion was because individuals and entities who were governed by the New Home Warranty Act were already subject to a registration and insurance requirement and a regulatory mechanism that provided recourse to homeowners.

In this case, the Heaths engaged a general contractor to build a new home for them in Florham Park.  After much of the home had been completed, the Heaths engaged Czar, Inc. to design the kitchen, to move some of the plumbing and electrical fixtures, and to build and install custom kitchen cabinets.  Before Czar, Inc. completed the work, a dispute arose and the Heaths refused to pay Czar, Inc. the full contract price.  Czar, Inc. sued the Heaths for breach of contract and the Heaths sued Czar, Inc. under, among others, the Consumer Fraud Act.  At the trial of the case, Czar, Inc. argued that it was engaged in the building of a new home, and therefore was not subject to the Consumer Fraud Act.  The Heaths argued that Czar, Inc. was engaged in making home improvements, and therefore was subject to the Consumer Fraud Act.

The Supreme Court examined both the Consumer Fraud Act (including the 2004 Amendments) and the New Home Warranty Act, and determined that the two Acts were intended by the legislature to create a seamless, harmonious protective scheme.  The Supreme Court noted that both the courts and the legislature have been engaged in expanding the protections offered to consumers under the Consumer Fraud Act.  If the Court were to accept Czar, Inc.’s argument, the homeowners would essentially be left without a remedy.  On the one hand, Czar, Inc. was not registered with the New Home Warranty Act and did not provide to the Heaths the warranty required of builders under that Act.  On the other hand, Czar, Inc. argued that it should not be subject to the Consumer Fraud Act because it was engaged in building a new home, as defined in the New Home Warranty Act.  The Court refused to read the two statutes in a manner that would leave some contractors subject to neither statute.  Therefore, the Court decided that Czar, Inc. was not engaged in building a new home, and was therefore subject to the provisions of the Consumer Fraud Act.

This case illustrates that both homeowners and contractors must navigate a complicated regulatory system that involves multiple statutes when involved in a lawsuit dealing with home improvements or the building of a new home.  A New Jersey consumer fraud lawyer or a New Jersey construction lawyer can help individuals and businesses understand the applicable statutes and regulations.

In Homa v. American Express, the Third Circuit Court of Appeals held that these provisions are not valid if the result of applying the provision will violate a fundamental public policy of the state where the dispute occurred.   Mr. Homa applied for an American Express “Blue Cash” credit card based on a promise by the credit card company that he could earn 5% cash back on purchases made with the card.  When American Express failed to pay Mr. Homa the rewards that he had been promised, Mr. Homa sought to bring a class action lawsuit against American Express on behalf of himself and other similarly-situated plaintiffs in New Jersey.  The purpose of a class action is to provide a remedy in cases where each individual plaintiffs damages are small, but the damages suffered by a group of similarly-situated individuals is large. 

In responding to the lawsuit, American Express argued that the credit agreement contained a provision that stated that all disputes between the parties would have be resolved by arbitration, and that the customer does not have the right to litigate or arbitrate any disputes as a class action.  The credit agreement also contained a provision that the laws of the State of Utah would apply to any dispute between the parties.  Utah has passed a statute the says that provisions in credit agreements that prohibit class action lawsuits or arbitrations are valid.  American Express argued that Utah law applied to the dispute with Mr. Homa, and because the provision prohibiting class actions was valid under Utah law, the court had to order Mr. Homa to submit to arbitration and to argue his case as an individual, not as part of a class action. 

However, New Jersey law says that clauses in credit agreements that prohibit a plaintiff from litigating or arbitrating a dispute as part of a class action are unconscionable and against the fundamental public policy of New Jersey.  The Third Circuit Court of Appeals held that New Jersey law, and not Utah law, would apply to the dispute because if they were to apply Utah law, the result would be a violation of a fundamental public policy in New Jersey and New Jersey has a stronger interest in this litigation than Utah. 

If you believe that you are a victim of consumer fraud, there may be recourse even if the agreement with the merchant provides that the laws of a state with weaker consumer protection laws than New Jersey apply.  Contact a New Jersey consumer fraud lawyer to discuss potential recourse based on the facts and circumstances of your case.

On February 19, 2009, the Supreme Court of New Jersey (New Jersey’s highest court), handed down a decision that is a huge victory for New Jersey consumers. In Bosland v. Warnock Dodge, Inc., et al. (Feb. 19, 2009), the Supreme Court held that a consumer does not need to ask for a refund from a merchant who has overcharged the consumer before the consumer can sue under New Jersey’s Consumer Fraud Act.

The Consumer Fraud Act (”CFA”) makes the use of any “unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact” by a merchant an unlawful practice. The major benefits to consumers of the Consumer Fraud Act are that if a merchant is found to have violated the act, that merchant must pay to the consumer triple damages and the consumer’s attorneys’ fees and costs.

Prior to the enactment of the CFA, when a merchant used an unconscionable commercial practice to deceive a consumer, the damage to the consumer was often so small that it was not worth it to the consumer to bring a lawsuit. Many times, an attorney’s fees would amount to much more than the amount the consumer lost as a result of the merchant’s fraudulent practice. The CFA solved this problem by providing that a merchant found to have violated the CFA would be liable to pay the consumer three times the damages the consumer suffered, and the merchant would also have to pay the consumer’s reasonable attorneys’ fees. As a result, a consumer can now hire a consumer fraud lawyer to represent them against a merchant, even if the damages suffered by the consumer are minor.

In Bosland v. Warnock Dodge, Inc., et al., plaintiff Rhonda Bosland purchased a new car from defendant Warnock Dodge. The invoice given to Ms. Bosland from the car dealer contained a $117 “registration fee.” Ms. Bosland later learned that the actual registration fee charged by the Motor Vehicle Commission was less than the “registration fee” charged by the dealer. At the time of the sale, the purpose of the extra charge was not disclosed to Ms. Bosland. Instead of asking the dealer for a refund, Ms. Bosland filed a lawsuit against the dealer under, among others, the CFA.

The dealer filed a Motion for Summary Judgment with the lower court, seeking dismissal of Ms. Bosland’s consumer fraud claim. The basis for the dealer’s motion was the fact that Ms. Bosland did not seek a refund directly from the dealer before filing the lawsuit. The lower court agreed with the dealer and dismissed Ms. Bosland’s claim under the CFA. Ms. Bosland appealed to the New Jersey Superior Court, Appellate Division. The Appellate Division disagreed with the lower court and reversed the decision to dismiss Ms. Bosland’s claim under the CFA. The dealer then filed an appeal with the New Jersey Supreme Court.

The Supreme Court agreed with the Appellate Division that a consumer is not required to seek a refund directly from the merchant before filing suit under the CFA. The Supreme Court determined that only three elements are required for a consumer to bring a claim under the CFA: (1) that the defendant engaged in conduct that is prohibited by the CFA; (2) that the plaintiff suffered an ascertainable loss; and (3) that the plaintiff’s loss was caused by the defendant’s conduct. When the New Jersey legislature enacted the CFA, it did not put anything in the language of the statute that would require the consumer to first seek a refund directly from the merchant before filing suit. Therefore, no such requirement exists.

The Court rejected the dealer’s argument that Ms. Bosland did not suffer an ascertainable loss or that any loss suffered by Ms. Bosland was not caused by any unlawful activity on the part of the dealer because she could have gotten a full refund from the dealer without filing a lawsuit. The Supreme Court reasoned that if they were to accept the dealer’s arguments, they would be creating hurdles within the CFA that would go against the Legislature’s intent to create broad protection for consumers.

This case is an important one for New Jersey consumers. If you have been a victim of an unlawful or unconscionable business practice by any merchant, a New Jersey consumer fraud lawyer may be able to help you regardless of whether you demanded a refund directly from the merchant.